The business impact of climate change
Climate change poses significant challenges to businesses across various sectors, with impacts on supply chains and power grids being among the most pressing issues:
- Supply chain disruptions: Climate change can have profound effects on supply chains, with extreme weather events—such as floods, storms and droughts—potentially causing delays and disruptions. These events can impact the availability of raw materials, transportation of goods and overall efficiency of the supply chain. In 2011, Thailand's severe floods disrupted the global supply chain, impacting major manufacturers and prompting businesses to reassess supply chain risk management.
- Power grid vulnerabilities: Climate change can also lead to disruptions in power grids, as increasing temperatures and extreme weather events put added strain on energy infrastructure. The consequences of power grid failures can be severe, affecting not only individual businesses but entire communities and regions. The 2021 Texas power outage, triggered by severe winter weather, resulted in $130 billion of lost revenue and storm damage.
By acknowledging the business impact of climate change and embracing digital transformation, organizations can develop effective strategies to address supply chain and power grid vulnerabilities, ultimately contributing to a more sustainable and resilient global community.